Thailand Capital Markets Deal: Thai Life Insurance’s Bt37bn IPO

IFR Asia Awards 2022
3 min read
S Anuradha

New lease of life

Thai Life Insurance successfully sold a Bt37bn (US$1bn) float to local and foreign investors at a time when most issuers were staying away from the market.

The completion of Thailand’s largest ever insurance issue and South-East Asia’s largest insurance float in over two decades was a shot in the arm for the IPO market.

The IPO was originally planned for the early part of 2022 but Russia’s invasion of Ukraine, an upturn in global interest rates and inflation concerns led to its deferral. Finally, the company decided to launch a slightly smaller deal in June.

Up to 2.16bn shares (850m primary/1.31bn secondary) or 18.8% of the capital were on offer, compared with the 2.38bn previously disclosed. Existing shareholders VC Property and Her Sing (HK) were the vendors of the secondary shares. The greenshoe was also cut to 161.6m from 322.5m.

The float was marketed and priced at a fixed price of Bt16, giving a final size of Bt37bn after the greenshoe was exercised.

Thai IPOs are usually lapped up by domestic investors, but the lack of familiarity with the life insurance sector required additional investor education. Bangkok Life Assurance is the only local-listed peer and it listed way back in 2009.

Thai Life conducted roadshows to explain how the life insurance sector works, the growth outlook for the sector in Thailand, and the regulatory framework.

Investors were also reassured by the fact that Japan’s Meiji Yasuda Life Insurance, a minority shareholder, was willing to subscribe to the IPO to maintain its shareholding at 15%.

In order to sell the IPO to foreigners, the issuer had to win approval from the insurance regulator to increase the foreign holding limit in the company to 49% from 25%.

Crucially, local and foreign cornerstone investors subscribed to 50% of the offer, giving the deal stability in an unpredictable market. Singapore’s sovereign wealth fund GIC and US asset manager Oaktree Capital Management were among the six international cornerstone investors, and there were around a dozen domestic investors.

The result was that both foreigners and local investors lent their support, with the deal fully covered on the first day of launch. Over 100 accounts participated, and foreign investors bought nearly 40% of the deal.

The issue price represented a 2021 price to embedded value of 1.2 times, coming at a premium to Bangkok Assurance’s 1.1x multiple and Prudential’s 0.95x.

Thai Life is majority-owned by the Chaiyawan family.

Bank of America, Citigroup, Kiatnakin Phatra and Nomura were the joint global coordinators and bookrunners with CGS-CIMB Securities, CIMB Investment Bank, Macquarie Capital, Finansa Securities and Krungsri Securities.

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